Supplement to Commission Guidance Regarding Proxy Voting Responsibilities of

 
SECURITIES AND EXCHANGE COMMISSION 
17 CFR Part 276  
Release No. IA-5547 
Supplement to Commission Guidance Regarding Proxy Voting Responsibilities of 
Investment Advisers  
AGENCY:  Securities and Exchange Commission.  
ACTION:  Guidance.  
SUMMARY:  The Securities and Exchange Commission (“Commission”) is publishing 
supplementary guidance regarding the proxy voting responsibilities of investment advisers under 
its regulations issued under the Investment Advisers Act of 1940 (the “Advisers Act”) in light of 
the Commission’s amendments to the rules governing proxy solicitations under the Securities 
Exchange Act of 1934 (the “Exchange Act”).  
DATES:  Effective September 3, 2020 
FOR FURTHER INFORMATION CONTACT:  Thankam A. Varghese, Senior Counsel; or 
Holly Hunter-Ceci, Assistant Chief Counsel, at (202) 551-6825 or [email protected], Chief 
Counsel’s Office, Division of Investment Management, Securities and Exchange Commission, 
100 F Street NE, Washington, DC 20549-8549. 
SUPPLEMENTARY INFORMATION:  The Commission is    publishing supplementary 
guidance regarding the proxy voting responsibilities of investment advisers under 17 CFR 
275.206(4)-6 [Rule 206(4)-6   under the Advisers Act [15 U.S.C. 80b]].
1
  
 
                                                
1
  Unless otherwise noted, when we refer to the Advisers Act, or any paragraph of the Advisers Act, we are 
referring to 15 U.S.C. 80b of the United States Code, at which the Advisers Act is codified, and when we 
refer to rules under the Advisers Act, or any paragraph of these rules, we are referring to title 17, part 275 
of the Code of Federal Regulations [17 CFR part 275], in which these rules are published.   

2 
 
I. INTRODUCTION 
 
The Commission previously issued guidance discussing how the fiduciary duty and rule 
206(4)-6 under the Advisers Act relate to an investment adviser’s exercise of voting authority on 
behalf of clients and also provided   examples to help facilitate investment advisers’ compliance 
with their obligations in connection with proxy voting.
2
  We are supplementing this guidance in 
light of information gained in connection with our ongoing review of the proxy voting process 
and our related regulations, including the amendments to the proxy solicitation rules under the 
Exchange Act that we are issuing at this time.
3
   
We expect that the Exchange Act amendments adopted in Release No. 34-89372 will 
result in improvements in the mix of information that is available to investors and material to a 
voting decision.  In particular, we expect issuers will have access to proxy advisory firm 
recommendations in a timeframe that will permit those issuers to make available to shareholders 
additional information that may be material to a voting decision in a more systematic and timely 
manner than they could previously.
4
  We also expect that the amendments will result in the 
availability of that addit ional information being made known to proxy advisory firms and their 
clients in a timely manner, including because proxy advisory firms, as a condition to the 
                                                
2
  Commission Guidance Regarding Proxy Voting Responsibilities of Investment Advisers, Release No. IA-
5325 (Aug. 21, 2019), 84 FR 47420 (Sept. 10, 2019) (“Commission Guidance on Proxy Voting 
Responsibilities”). 
3
  See Exemptions from the Proxy Rules for Proxy Voting Advice, Release No. 34-89372 (July 22, 2020) 
(“Amendments to Proxy Solicitation Rules”); see also 17 CFR 240.14a-2(b)(9)(iv); see also Commission 
Guidance on Proxy Voting Responsibilities, supra at n. 2.  Proxy advisory firms will not be required to 
comply with certain of the amendments we are making to the proxy solicitation rules until December 1, 
2021.  This guidance addresses the application of the fiduciary duty, Form ADV, and rule 206(4)-6 under 
the Advisers Act to an investment adviser’s proxy voting responsibilities in connection with current 
practices, as well as any policies or procedures that may be implemented by proxy advisory firms under the 
final amendments. 
4
  See infra at n. 6.  While 17 CFR 240.14a-2(b) uses the term “proxy voting advice business,” we use the 
term “proxy advisory firm” in this release.  This is consistent with the Commission Guidance on Proxy 
Voting Responsibilities, which this release supplements.    

3 
 
availability of the exemptions in 17 CFR 240.14a-2(b)(1) and (b)(3), must adopt policies and 
procedures that are reasonably designed to provide investment advisers and other clients with a 
mechanism by which they can reasonably be expected to become aware of that addit ional 
information prior to making voting decisions.  Accordingly, we are providing supplementary 
guidance to assist investment advisers in assessing how to consider the addit ional informat ion 
that may become more readily available to them as a result of these amendments, including in 
circumstances where the investment adviser utilizes a proxy advisory firm’s electronic vote 
management system that “pre-populates” the adviser’s proxies with suggested voting 
recommendations and/or for voting execution services.  The supplementary guidance also 
addresses disclosure obligations and considerations that may arise when investment advisers use 
such services for voting.   
II. SUPPLEMENTAL GUIDANCE REGARDING INVESTMENT ADVISERS’ PROXY 
VOTING RESPONSIBILITIES 
 Question 2.1:  In some cases, proxy advisory firms assist clients, including investment 
advisers, with voting execution, including through an electronic vote management system that 
allows the proxy advisory firm to: (1) populate each client’s votes shown on the proxy advisory 
firm’s electronic voting platform with the proxy advisory firm’s recommendations based on that 
client’s voting instructions to the firm (“pre-population”); and/or (2) automatically submit the 
client’s votes to be counted (“automated voting”).  Pre-populat ion and automated voting 
generally occur prior to the submission deadline for proxies to be voted at the shareholder 
meeting.  In various circumstances, an investment adviser, in the course of conducting a 

4 
 
reasonable investigation into matters on which it votes,
5
 may become aware that an issuer that is 
the subject of a voting recommendation intends to file or has filed additional soliciting materials 
with the Commission setting forth the issuer’s views regarding the voting recommendation. 
These materials may or may not reasonably be expected to affect the investment adviser’s voting 
determination.
6
  In addition, these materials may become available after or around the same time 
that the investment adviser’s votes have been pre-populated but before the submission deadline 
for proxies to be voted at the shareholder meeting.
7
  In these circumstances, what steps should an 
investment adviser take to demonstrate that it is making voting determinations in a client’s best 
interest? 
 Response: The Commission in its prior guidance discussed   a number of steps that an 
investment adviser could take to demonstrate that it is making voting determinations in a client’s 
best interest.
8
  These include additional steps when an investment adviser utilizes a proxy 
advisory firm, such as assessing pre-populated votes shown on the proxy advisory firm’s 
electronic voting platform and considering additional information that may become available 
                                                
5
  See Commission Guidance on Proxy Voting Responsibilities, text at notes 15 and 37 and in response to 
Question 4. 
6
  For example, we expect that 17 CFR 240.14a-2(b)(9)(ii)(A) will result in issuers being made aware of 
recommendations by proxy voting advice businesses (the term used in the rule for what we refer to here as 
proxy advisory firms) in a timeframe that will permit those issuers to make any views regarding those 
recommendations available in a more systematic and timely manner than was previously the case.  17 CFR 
240.14a-2(b)(9)(ii)(B) also requires that proxy voting advice businesses adopt policies and procedures 
reasonably designed to provide their clients, including investment advisers, with a mechanism by which 
they can reasonably be expected to become aware of those views.  See Amendments to Proxy Solicitation 
Rules, supra at n. 3; see also 17 CFR 240.14a-2(b)(9)(iv) (providing a non-exclusive safe harbor pursuant 
to which proxy voting advice businesses will be deemed to satisfy the principle-based requirement of Rule 
14a-2(b)(9)(ii)(B)). 
7
  Unless otherwise indicated, our reference to the term “meeting” throughout Question 2.1 is intended to 
include an issuer’s solicitation of written consents or authorizations in lieu of a shareholder meeting.  For 
example, if the issuer is seeking the necessary shareholder approval for a matter through a solicitation of 
written consents or authorizations in lieu of a vote at a shareholder meeting, our guidance addresses the 
additional information that may become available after the proxy advisory firm’s recommendations have 
been pre-populated but before the written consents or authorizations have been submitted.   
8
  See Commission Guidance on Proxy Voting Responsibilities, 84 FR 47420, at 47423 (Question No. 2). 

5 
 
before the relevant votes are cast.  Together with those steps, an investment adviser should 
consider whether its policies and procedures, including any policies and procedures with respect 
to automated voting of proxies, are reasonably designed to ensure that it exercises voting 
authority in its client’s best interest.  An investment adviser should consider, for example, 
whether its policies and procedures address circumstances where the investment adviser has 
become aware that an issuer intends to file or has filed additional soliciting materials with the 
Commission after the investment adviser has received the proxy advisory firm’s voting 
recommendation but before the submission deadline.  In such cases, if an issuer files such 
additional information sufficiently in advance of the submission deadline and such information 
would reasonably be expected to affect the investment adviser’s voting determination, the 
investment adviser would likely need to consider such information prior to exercising voting 
authority in order to demonstrate that it is voting in its client’s best interest.
9
  In addit ion, 
because the timing of pre-population and automated voting may result in proxy advisory firms 
possessing non-public information regarding how an investment adviser intends to vote a client’s 
securit ies, the investment adviser should also consider reviewing its agreements with any proxy 
advisory firms to determine whether the agreements would permit the proxy advisory firms to 
utilize this information in a manner that would not be in the best interest of the investment 
adviser’s client.
10
 
                                                
9
  Whether such information would reasonably be expected to affect an investment adviser’s voting 
determination for a client may depend, in part, on the agreed upon scope of the investment adviser’s 
authority and responsibilities to vote proxies on behalf of that client, as discussed in response to Question 1 
of the Commission Guidance on Proxy Voting Responsibilities.  See Commission Guidance on Proxy 
Voting Responsibilities, 84 FR 47420, at 47422 (Question No. 1). 
10
  For example, the investment adviser may want to consider the extent to which the proxy advisory firm 
would be permitted to share this information (including information on aggregated voting intentions of the 
firm’s clients) with third parties.  

6 
 
 In its prior guidance, the Commission also discussed how an investment adviser and its 
client may agree on the scope of the investment adviser’s authority and responsibilities to vote 
proxies on behalf of that client.
11
  The Commission explained that an investment adviser may 
agree with its client to the scope of voting arrangements but that scoping the relationship requires 
the investment adviser to make full and fair disclosure and the client to provide informed 
consent.  Differences in agreements between investment advisers and their clients as to the scope 
of the advisory relationship may result in a variety of arrangements for voting client securities, 
which may address, for example, parameters around the method of voting execution. 
An investment adviser also has an obligation, as a result of its duty of loyalty to clients, 
to make full and fair disclosure to its clients of all material facts relating to the advisory 
relat ionship.
12
  These include material facts related to the exercise of voting authority with 
respect to client securities.  The Commission recently explained that, “[i]n order for disclosure to 
be full and fair, it should be sufficiently specific so that a client is able to understand the material 
fact or conflict of interest and make an informed decision whether to provide consent.”
13
  
Further, rule 206(4)-6 and Form ADV require an investment adviser to describe to clients its 
voting policies and procedures.
14
 
In light of the above, we believe that an investment adviser that uses automated voting 
should consider disclo sing: (1) the extent of that use and under what circumstances it uses 
                                                
11
  See Commission Guidance on Proxy Voting Responsibilities, 84 FR 47420, at 47422 (Question No. 1). 
12
  See Commission Interpretation Regarding Standard of Conduct for Investment Advisers, Release No. IA-
5248 (June 5, 2019), 84 FR 33669, at 33675 (July 12, 2019) (“[t]o meet its duty of loyalty, an adviser must 
make full and fair disclosure to its clients of all material facts relating to the advisory relationship.”) 
(internal citations omitted). 
13
  See id., text at note 59. 
14
  Rule 206(4)-6(c) requires investment advisers to describe their voting policies and procedures to clients. 
See also Form ADV, Part 2A, Item 17 (requiring an adviser to briefly describe voting policies and 
procedures where it has, or will accept, authority to vote client securities).  

7 
 
automated voting; and (2) how its policies and procedures address the use of automated voting in 
cases where it becomes aware before the submission deadline for proxies to be voted at the 
shareholder meeting that an issuer intends to file or has filed additional soliciting materials with 
the Commission regarding a matter to be voted upon.  In addition, an investment adviser should 
also consider whether its policies and procedures are reasonably designed to address these 
disclosures.  Depending on the facts and circumstances, these disclosures may be necessary for 
the investment adviser to provide sufficiently specific information so that a client is able to 
understand the role of automated voting in the investment adviser’s exercise of voting authority.  
In those cases, the client may not, without this disclosure, have sufficiently specific information 
to provide informed consent with respect to the use of automated voting as a means of exercising 
voting authority either (a) for purposes of agreeing to the scope of the relationship or (b) as it 
relates to the investment adviser’s obligation, under its duty of loyalty, to provide full and fair 
disclosure relat ing to the advisory relat ionship.  In this regard, an investment adviser should also 
consider its obligations under rule 206(4)-6 and Form ADV as they relate to the investment 
adviser’s voting policies and procedures.  Accordingly, an investment adviser should carefully 
review its disclosures with respect to these matters in order to ascertain whether it has provided 
its clients with the disclosure necessary for the clients to provide informed consent with respect 
to the use of automated voting as a means of exercising voting authority and for the adviser to 
satisfy its obligations under rule 206(4)-6 and Form ADV. 
III. OTHER MATTERS 
Pursuant to the Congressional Review Act,
15
 the Office of Information and Regulatory 
                                                
15
  5 U.S.C. 801 et seq. 
 

8 
 
Affairs has designated this guidance as not a “major rule,” as defined by 5 U.S.C. 804(2). 
List of Subjects in 17 CFR Part 276 
 Securities. 
Amendments to the Code of Federal Regulations 
 For the reasons set out above, the Commission is amending title 17, chapter II, of the 
Code of Federal Regulations as set forth below: 
PART 276 – INTERPRETATIVE RELEASES RELATING TO THE INVESTMENT 
ADVISERS ACT OF 1940 AND GENERAL RULES AND REGULATIONS 
THEREUNDER 
 1. The authority citation for part 276 continues to read as follows: 
 Authority: 15 U.S.C. 80b et seq. 
 2. The table is amended by adding an entry for Release No. IA-5547 at the end to read as 
follows: 
  

9 
 
Subject Release No. Date 
Fed. Reg. Vol. and 
Page 
*  *  *  *  *  *  * 
Supplement to 
Commission 
Guidance Regarding 
the Proxy Voting 
Responsibilities of 
Investment Advisers 
IA-5547 September 3, 2020 [Insert FR citation of 
publication] 
 
By the Commission. 
Dated: July 22, 2020. 
 
 
Vanessa A. Countryman, 
Secretary. 

SECURITIES AND EXCHANGE COMMISSION 

17 CFR Part 276  

Release No. IA-5547 

Supplement to Commission Guidance Regarding Proxy Voting Responsibilities of 

Investment Advisers  

AGENCY:  Securities and Exchange Commission.  

ACTION:  Guidance.  

SUMMARY:  The Securities and Exchange Commission (“Commission”) is publishing 

supplementary guidance regarding the proxy voting responsibilities of investment advisers under 

its regulations issued under the Investment Advisers Act of 1940 (the “Advisers Act”) in light of 

the Commission’s amendments to the rules governing proxy solicitations under the Securities 

Exchange Act of 1934 (the “Exchange Act”).  

DATES:  Effective September 3, 2020 

FOR FURTHER INFORMATION CONTACT:  Thankam A. Varghese, Senior Counsel; or 

Holly Hunter-Ceci, Assistant Chief Counsel, at (202) 551-6825 or [email protected], Chief 

Counsel’s Office, Division of Investment Management, Securities and Exchange Commission, 

100 F Street NE, Washington, DC 20549-8549. 

SUPPLEMENTARY INFORMATION:  The Commission is publishing supplementary 

guidance regarding the proxy voting responsibilities of investment advisers under 17 CFR 

275.206(4)-6 [Rule 206(4)-6 under the Advisers Act [15 U.S.C. 80b]].1  

 

                                                
1  Unless otherwise noted, when we refer to the Advisers Act, or any paragraph of the Advisers Act, we are 

referring to 15 U.S.C. 80b of the United States Code, at which the Advisers Act is codified, and when we 
refer to rules under the Advisers Act, or any paragraph of these rules, we are referring to title 17, part 275 
of the Code of Federal Regulations [17 CFR part 275], in which these rules are published.   



2 
 

I. INTRODUCTION 
 

The Commission previously issued guidance discussing how the fiduciary duty and rule 

206(4)-6 under the Advisers Act relate to an investment adviser’s exercise of voting authority on 

behalf of clients and also provided examples to help facilitate investment advisers’ compliance 

with their obligations in connection with proxy voting.2  We are supplementing this guidance in 

light of information gained in connection with our ongoing review of the proxy voting process 

and our related regulations, including the amendments to the proxy solicitation rules under the 

Exchange Act that we are issuing at this time.3   

We expect that the Exchange Act amendments adopted in Release No. 34-89372 will 

result in improvements in the mix of information that is available to investors and material to a 

voting decision.  In particular, we expect issuers will have access to proxy advisory firm 

recommendations in a timeframe that will permit those issuers to make available to shareholders 

additional information that may be material to a voting decision in a more systematic and timely 

manner than they could previously.4  We also expect that the amendments will result in the 

availability of that additional information being made known to proxy advisory firms and their 

clients in a timely manner, including because proxy advisory firms, as a condition to the 

                                                
2  Commission Guidance Regarding Proxy Voting Responsibilities of Investment Advisers, Release No. IA-

5325 (Aug. 21, 2019), 84 FR 47420 (Sept. 10, 2019) (“Commission Guidance on Proxy Voting 
Responsibilities”). 

3  See Exemptions from the Proxy Rules for Proxy Voting Advice, Release No. 34-89372 (July 22, 2020) 
(“Amendments to Proxy Solicitation Rules”); see also 17 CFR 240.14a-2(b)(9)(iv); see also Commission 
Guidance on Proxy Voting Responsibilities, supra at n. 2.  Proxy advisory firms will not be required to 
comply with certain of the amendments we are making to the proxy solicitation rules until December 1, 
2021.  This guidance addresses the application of the fiduciary duty, Form ADV, and rule 206(4)-6 under 
the Advisers Act to an investment adviser’s proxy voting responsibilities in connection with current 
practices, as well as any policies or procedures that may be implemented by proxy advisory firms under the 
final amendments. 

4  See infra at n. 6.  While 17 CFR 240.14a-2(b) uses the term “proxy voting advice business,” we use the 
term “proxy advisory firm” in this release.  This is consistent with the Commission Guidance on Proxy 
Voting Responsibilities, which this release supplements.    



3 
 

availability of the exemptions in 17 CFR 240.14a-2(b)(1) and (b)(3), must adopt policies and 

procedures that are reasonably designed to provide investment advisers and other clients with a 

mechanism by which they can reasonably be expected to become aware of that additional 

information prior to making voting decisions.  Accordingly, we are providing supplementary 

guidance to assist investment advisers in assessing how to consider the additional information 

that may become more readily available to them as a result of these amendments, including in 

circumstances where the investment adviser utilizes a proxy advisory firm’s electronic vote 

management system that “pre-populates” the adviser’s proxies with suggested voting 

recommendations and/or for voting execution services.  The supplementary guidance also 

addresses disclosure obligations and considerations that may arise when investment advisers use 

such services for voting.   

II. SUPPLEMENTAL GUIDANCE REGARDING INVESTMENT ADVISERS’ PROXY 

VOTING RESPONSIBILITIES 

 Question 2.1:  In some cases, proxy advisory firms assist clients, including investment 

advisers, with voting execution, including through an electronic vote management system that 

allows the proxy advisory firm to: (1) populate each client’s votes shown on the proxy advisory 

firm’s electronic voting platform with the proxy advisory firm’s recommendations based on that 

client’s voting instructions to the firm (“pre-population”); and/or (2) automatically submit the 

client’s votes to be counted (“automated voting”).  Pre-population and automated voting 

generally occur prior to the submission deadline for proxies to be voted at the shareholder 

meeting.  In various circumstances, an investment adviser, in the course of conducting a 



4 
 

reasonable investigation into matters on which it votes,5 may become aware that an issuer that is 

the subject of a voting recommendation intends to file or has filed additional soliciting materials 

with the Commission setting forth the issuer’s views regarding the voting recommendation. 

These materials may or may not reasonably be expected to affect the investment adviser’s voting 

determination.6  In addition, these materials may become available after or around the same time 

that the investment adviser’s votes have been pre-populated but before the submission deadline 

for proxies to be voted at the shareholder meeting.7  In these circumstances, what steps should an 

investment adviser take to demonstrate that it is making voting determinations in a client’s best 

interest? 

 Response: The Commission in its prior guidance discussed a number of steps that an 

investment adviser could take to demonstrate that it is making voting determinations in a client’s 

best interest.8  These include additional steps when an investment adviser utilizes a proxy 

advisory firm, such as assessing pre-populated votes shown on the proxy advisory firm’s 

electronic voting platform and considering additional information that may become available 

                                                
5  See Commission Guidance on Proxy Voting Responsibilities, text at notes 15 and 37 and in response to 

Question 4. 
6  For example, we expect that 17 CFR 240.14a-2(b)(9)(ii)(A) will result in issuers being made aware of 

recommendations by proxy voting advice businesses (the term used in the rule for what we refer to here as 
proxy advisory firms) in a timeframe that will permit those issuers to make any views regarding those 
recommendations available in a more systematic and timely manner than was previously the case.  17 CFR 
240.14a-2(b)(9)(ii)(B) also requires that proxy voting advice businesses adopt policies and procedures 
reasonably designed to provide their clients, including investment advisers, with a mechanism by which 
they can reasonably be expected to become aware of those views.  See Amendments to Proxy Solicitation 
Rules, supra at n. 3; see also 17 CFR 240.14a-2(b)(9)(iv) (providing a non-exclusive safe harbor pursuant 
to which proxy voting advice businesses will be deemed to satisfy the principle-based requirement of Rule 
14a-2(b)(9)(ii)(B)). 

7  Unless otherwise indicated, our reference to the term “meeting” throughout Question 2.1 is intended to 
include an issuer’s solicitation of written consents or authorizations in lieu of a shareholder meeting.  For 
example, if the issuer is seeking the necessary shareholder approval for a matter through a solicitation of 
written consents or authorizations in lieu of a vote at a shareholder meeting, our guidance addresses the 
additional information that may become available after the proxy advisory firm’s recommendations have 
been pre-populated but before the written consents or authorizations have been submitted.   

8  See Commission Guidance on Proxy Voting Responsibilities, 84 FR 47420, at 47423 (Question No. 2). 



5 
 

before the relevant votes are cast.  Together with those steps, an investment adviser should 

consider whether its policies and procedures, including any policies and procedures with respect 

to automated voting of proxies, are reasonably designed to ensure that it exercises voting 

authority in its client’s best interest.  An investment adviser should consider, for example, 

whether its policies and procedures address circumstances where the investment adviser has 

become aware that an issuer intends to file or has filed additional soliciting materials with the 

Commission after the investment adviser has received the proxy advisory firm’s voting 

recommendation but before the submission deadline.  In such cases, if an issuer files such 

additional information sufficiently in advance of the submission deadline and such information 

would reasonably be expected to affect the investment adviser’s voting determination, the 

investment adviser would likely need to consider such information prior to exercising voting 

authority in order to demonstrate that it is voting in its client’s best interest.9  In addition, 

because the timing of pre-population and automated voting may result in proxy advisory firms 

possessing non-public information regarding how an investment adviser intends to vote a client’s 

securities, the investment adviser should also consider reviewing its agreements with any proxy 

advisory firms to determine whether the agreements would permit the proxy advisory firms to 

utilize this information in a manner that would not be in the best interest of the investment 

adviser’s client.10 

                                                
9  Whether such information would reasonably be expected to affect an investment adviser’s voting 

determination for a client may depend, in part, on the agreed upon scope of the investment adviser’s 
authority and responsibilities to vote proxies on behalf of that client, as discussed in response to Question 1 
of the Commission Guidance on Proxy Voting Responsibilities.  See Commission Guidance on Proxy 
Voting Responsibilities, 84 FR 47420, at 47422 (Question No. 1). 

10  For example, the investment adviser may want to consider the extent to which the proxy advisory firm 
would be permitted to share this information (including information on aggregated voting intentions of the 
firm’s clients) with third parties.  



6 
 

 In its prior guidance, the Commission also discussed how an investment adviser and its 

client may agree on the scope of the investment adviser’s authority and responsibilities to vote 

proxies on behalf of that client.11  The Commission explained that an investment adviser may 

agree with its client to the scope of voting arrangements but that scoping the relationship requires 

the investment adviser to make full and fair disclosure and the client to provide informed 

consent.  Differences in agreements between investment advisers and their clients as to the scope 

of the advisory relationship may result in a variety of arrangements for voting client securities, 

which may address, for example, parameters around the method of voting execution. 

An investment adviser also has an obligation, as a result of its duty of loyalty to clients, 

to make full and fair disclosure to its clients of all material facts relating to the advisory 

relationship.12  These include material facts related to the exercise of voting authority with 

respect to client securities.  The Commission recently explained that, “[i]n order for disclosure to 

be full and fair, it should be sufficiently specific so that a client is able to understand the material 

fact or conflict of interest and make an informed decision whether to provide consent.”13  

Further, rule 206(4)-6 and Form ADV require an investment adviser to describe to clients its 

voting policies and procedures.14 

In light of the above, we believe that an investment adviser that uses automated voting 

should consider disclosing: (1) the extent of that use and under what circumstances it uses 

                                                
11  See Commission Guidance on Proxy Voting Responsibilities, 84 FR 47420, at 47422 (Question No. 1). 
12  See Commission Interpretation Regarding Standard of Conduct for Investment Advisers, Release No. IA-

5248 (June 5, 2019), 84 FR 33669, at 33675 (July 12, 2019) (“[t]o meet its duty of loyalty, an adviser must 
make full and fair disclosure to its clients of all material facts relating to the advisory relationship.”) 
(internal citations omitted). 

13  See id., text at note 59. 
14  Rule 206(4)-6(c) requires investment advisers to describe their voting policies and procedures to clients. 

See also Form ADV, Part 2A, Item 17 (requiring an adviser to briefly describe voting policies and 
procedures where it has, or will accept, authority to vote client securities).  



7 
 

automated voting; and (2) how its policies and procedures address the use of automated voting in 

cases where it becomes aware before the submission deadline for proxies to be voted at the 

shareholder meeting that an issuer intends to file or has filed additional soliciting materials with 

the Commission regarding a matter to be voted upon.  In addition, an investment adviser should 

also consider whether its policies and procedures are reasonably designed to address these 

disclosures.  Depending on the facts and circumstances, these disclosures may be necessary for 

the investment adviser to provide sufficiently specific information so that a client is able to 

understand the role of automated voting in the investment adviser’s exercise of voting authority.  

In those cases, the client may not, without this disclosure, have sufficiently specific information 

to provide informed consent with respect to the use of automated voting as a means of exercising 

voting authority either (a) for purposes of agreeing to the scope of the relationship or (b) as it 

relates to the investment adviser’s obligation, under its duty of loyalty, to provide full and fair 

disclosure relating to the advisory relationship.  In this regard, an investment adviser should also 

consider its obligations under rule 206(4)-6 and Form ADV as they relate to the investment 

adviser’s voting policies and procedures.  Accordingly, an investment adviser should carefully 

review its disclosures with respect to these matters in order to ascertain whether it has provided 

its clients with the disclosure necessary for the clients to provide informed consent with respect 

to the use of automated voting as a means of exercising voting authority and for the adviser to 

satisfy its obligations under rule 206(4)-6 and Form ADV. 

III. OTHER MATTERS 

Pursuant to the Congressional Review Act,15 the Office of Information and Regulatory 

                                                
15  5 U.S.C. 801 et seq. 

 



8 
 

Affairs has designated this guidance as not a “major rule,” as defined by 5 U.S.C. 804(2). 

List of Subjects in 17 CFR Part 276 

 Securities. 

Amendments to the Code of Federal Regulations 

 For the reasons set out above, the Commission is amending title 17, chapter II, of the 

Code of Federal Regulations as set forth below: 

PART 276 – INTERPRETATIVE RELEASES RELATING TO THE INVESTMENT 

ADVISERS ACT OF 1940 AND GENERAL RULES AND REGULATIONS 

THEREUNDER 

 1. The authority citation for part 276 continues to read as follows: 

 Authority: 15 U.S.C. 80b et seq. 

 2. The table is amended by adding an entry for Release No. IA-5547 at the end to read as 

follows: 

  



9 
 

Subject Release No. Date Fed. Reg. Vol. and 
Page 

*  *  *  *  *  *  * 

Supplement to 

Commission 

Guidance Regarding 

the Proxy Voting 

Responsibilities of 

Investment Advisers 

IA-5547 September 3, 2020 [Insert FR citation of 

publication] 

 

By the Commission. 

Dated: July 22, 2020. 

 

 

Vanessa A. Countryman, 

Secretary.